While all Western economies will be impacted by the war in Ukraine and the economic sanctions imposed on Russia, some are less exposed than others to soaring prices. Such is the case of France, which is more sheltered than its neighbors, having opted for an energy mix, and whose trade relations with Russia are limited.
Russia ranks 14th among France's customers
Although trade relations between France and Russia go back a long way, they are no longer as important as they once were. While exports to Russia represent 2% of Germany's GDP, they account for less than 1% of France's GDP.
In 2019, French companies exported 5.6 billion euros worth of goods and services to Russia. In 2021, exports to Russia accounted for just 1.3% of French foreign sales, or 6.4 billion euros.
What's more, only the aeronautics sector, and Airbus in particular,exports over 1 billion euros toRussia. Exports from other sectors, such as pharmaceuticals, perfumes, chemicals and automobiles, are more limited.
Imports from Russia are limited almost exclusively to energy. In 2021, hydrocarbons and refined oil accounted for 74% of imports, totaling 9.7 billion euros.
Today, Russia ranks 14th among France's customers, and 17th among its suppliers. The stock of French direct investment (FDI) in Russia represents just 1.5% of the total stock abroad.
The choice of energy mix
What's more, France' s choice of energy mix means that it is more sheltered from the economic consequences of war than its eurozone neighbors. Having opted for nuclear power for the most part, followed by oil, gas, renewable energies and coal, France is not as dependent on Russian gas as Germany, for example.
Gas accounts for 27% of Germany's energy needs, compared with 16% for France. What's more, Russian gas accounts for only a small proportion of France's purchases, 2.8% according to Eurostat, compared with 18% for Italy and 17% for Germany.
All these factors, combined with the extensive regulation of the French electricity market, explain why France did not suffer as severe an energy shock as other European countries, all the more so as even before the start of the war in Ukraine, the government had taken measures to ensure that consumers would not suffer a sudden rise in their gas and electricity bills.
Admittedly, France will not escape a further rise in inflation, which could quickly reach 4%, compared with 3.6% in February. But economists expect price rises to be more contained than in other eurozone countries.
Inflation and the war in Ukraine are likely to limit growth in all European countries, although it is still difficult to make projections. Business investment, but also household investment and consumption, which are key drivers of the French economy, are likely to be affected.
However, France has one advantage: a growth rate of 2.4%. According to some economists, inflation and the war in Ukraine could cost France between 0.7 and 1 point of GDP.